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Sydney-headquartered audiovisual technology company Audinate (ASX: AD8) has now lost all the gains made by its share price over the past year, after a tempered outlook on revenue spooked investors into a sell-off that shed $359 million off its market capitalisation.
Despite announcing an expected 28.4 per cent lift in unaudited revenue to US$60 million ($91.5 million) for FY24, and an almost doubling of earnings to a range of $19.5-20.5 million, the company lost its unicorn status today as shares fell 32.39 per cent to just above $9.
This is the lowest AD8 shares have been since July 2023, and is down 62 per cent on highs of $23.51 achieved in March.
The sell-off likely relates to today's guidance for a marginally lower gross profit in FY24 and a decline in revenue in FY25, before a "return to anticipated growth and more predictable order patterns in FY26".
Audinate is known for its audiovisual ethernet media networking solution Dante, selling hardware such as chips, cards and modules (CCM) as well as software systems for users.
The group notes that FY24 growth was aided by a conservative over-ordering of chips and modules by its manufacturer customers, driving Audinate's sales backlog to record levels.
The company expects a preference for software-based Dante implementations to increase in the current financial year driving the business's overall margin towards 80 per cent. The kicker is that these implementations drive adoption via hardware cost savings for equipment manufacturers, but there is a lower per-unit revenue.
Cost growth in FY25 has been projected as 7-9 per cent, compared to historical annual cost growth of 28.5 per cent over the past three years.
Audinate adds that its FY25 result will be influenced by shortening order lead times, a rebalancing of inventory holdings across the industry, and the rate at which its manufacturing customers clear raw material inventory.
The group has described this as a "transitional year" but emphasised its long-term outlook remains strong, with more than six million Dante devices in circulation and another million being added each year.
"Whilst we expect FY25 to be a transitional year, the long-term strategic thesis for Audinate remains strong," says Audinate co-founder and CEO Aidan Williams.
"With the challenges of the last few years behind us, we will redouble our efforts to drive audio and video unit growth, a key building block in our long-term strategy.
"I am delighted by the launch of Dante Director and more generally demand for Dante software implementations which could drive overall gross margins towards 85 per cent over the longer term."
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